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The State of Hospitality

Over the past decade Cape Town has firmly established itself as a leading international destination, earning a plethora of prestigious awards and accolades and attracting keen local and foreign investor interest, with tourism now the city’s second largest industry supporting over 300 000 jobs in the Western Cape.

And, until a year ago, the Mother City’s stellar upward trajectory seemed unassailable, with tourist numbers increasing annually and extensive development continuing despite growing uncertainty around the stability of the national economy.

However, even Cape Town is no match for mother nature and, in its third year, the intensifying drought and increasingly severe water restrictions have finally begun to dent the city’s armour with visitors starting to cancel trips to South Africa’s tourism capital.

But Glyn Taylor, Joint CEO of the Century City Conference Centre&Hotel (CCCC&H) believes that there are many compelling reasons for remaining optimistic, with the main challenge being to communicate to the world at large that visitors do not aggravate the situation but that they are, in fact, a crucial part of the solution.

“According to the latest Aviation Barometer published by Airports Company South Africa, tourism numbers were still strong in the fourth quarter of 2017 with international arrivals at Cape Town International arrivals increasing by 13.85% and so it’s critical that we adapt as quickly as we can to limit the damage going forward.”

Gary Koetser, Taylor’s counterpart, adds that another encouraging indication of the city’s resilience and its potential to weather the storm is the fact that development in the hospitality sector has barely paused for breath during the last three years with many ground-breaking projects already completed or in the pipeline.

Launched at the beginning of 2016, the R1 billion Century City Conference Centre&Hotel became the largest privately-owned conference and exhibition space in the Western Cape with a total capacity of 1 900 across 20 venues, with an adjacent 125-room hotel.

During the same year, Amdec announced the launch of their R10 billion Harbour Arch development in the foreshore, a mixed-use precinct that includes a 200-room Cape Town Marriott Hotel Foreshore and a 150-room Residence Inn by Marriott Cape Town Foreshore as well as commercial, retail and residential components. Furthermore, The Yacht Club, their R1.2 billion mixed use project adjacent to the V&A Waterfront is already well under way.

“In 2017 we saw the launch of a number of new hospitality establishments, including the luxurious Silo Hotel in the Waterfront and a R700m Tsogo Sun development in the City Bowl which incorporates two hotels comprising an additional 504 rooms.

“Late last year, Wesgro’s investment team secured a further R1.9 billion in committed investments for the industry emanating from 14 deals which will help create more than 2 100 jobs over the next five years in the Western Cape.”

Wesgro CEO, Tim Harris, says that the province has seen significant investment into tourism products from both the government and the private sector, which not only confirms hospitality industry’s commitment to the Western Cape, but is also a strong indication that the tourism sector is going to continue its upward trajectory.

Koetser says: “According to Wesgro’s calculations, tourism supports over 200 000 direct jobs across the province, as well as a further 100 000 indirect and induced jobs. It also contributes R38-billion annually to the local economy.

“The Western Cape’s popularity as a tourism destination is also central to the growth of the national tourism sector in South Africa which contributes around 9% to South Africa’s gross domestic product (GDP), of which about a quarter is generated in the Western Cape.”

According to John Ashbourne, Africa economist at Capital Economics, a 50% drop in tourist spend in the Western Province would shave about 1.1% off headline national GDP. This would mean that South Africa’s economic growth range would be, at best, slight or even lead to a recession as forecasts for growth this year range from 0.9% to 2.3%.

Taylor believes that this worst-case scenario can successfully be averted if the public and private sectors continue to work together to stave off the potentially crippling impact of the water crisis.

He concludes: “Even during crises, Cape Town keeps raking in awards. Last year the city was voted best African business tourism event destination in 2017 by the International Congress and Convention Association, ICCA, for the fourth consecutive win for the city and Cape Town International Airport voted best in Africa.

“At the end of the day, we are now prepared for the future because all the planning and investment in water saving and supply products and systems has put Cape Town in a much stronger position to deal with the effects of climate change.

“It has forced business to rely less on the city to provide this precious commodity and has ensured a proactive approach to the increasing threat that global warming presents. And it has forced communities to change their habits surrounding water usage.